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Aarhus, A-G Kokott’s opinion, and the PCO reciprocal cap

Forgive me for returning to this case, but it raises all sorts of questions. On the face of it, it concerns 2 specific environmental directives, but it has implications for costs generally in environmental cases.

And why do I go on about costs? Because the prospect of being seriously out of pocket deters even the most altruistic environmentalist if they lose. Some may be purely NIMBYs, but most have a rather wider sense of the things that matter and that is not just about protecting their own assets. Claimants are normally up against public authorities and/or developers, so the balance of power has to be struck in the right place between them.

We are back with the UN-ECE Aarhus Convention (my recent bluffers’ guide is here). And the A-G was considering what (before the rules changed in the UK) the claimant in an environmental judicial review ought to have to pay if he or she lost – a Protective Costs Order or PCO. The key question is whether the costs rules would dissuade people from starting proceedings -or in the terms of Article 9(4) of Aarhus, that such proceedings were not prohibitively expensive,

For the new rules, see my post on the new UK regime, from which you will note that the sum is capped at £5,000. A huge amount of money if you live in a poor part of town trying to stop air quality getting worse. But not very much if you are part of a mobilised action group in a smart area.

But any cap comes at a cost – to your lawyers, and potentially you. Let me explain.

The current rules say that a PCO involves you (and your lawyers) limiting your/their costs to £35,000 – in the jargon, a reciprocal cap. Sounds fair enough if your liability is capped at £5,000, until you think about it a bit more, Your real adversary may not be the authority that granted permission for the houses or wind farm or Energy-from-Waste plant, but the promoter. In the world of current public law litigation, the promoter will spend vastly more than £35,000 on defending its turf, because it is not that concerned that it can recover what it spends – it just wants to go ahead with the project. (Trust me, I have seen what they would like to charge the other side if they could). So the real question is how much of a squeeze should be on the claimant’s lawyers’ costs, as and when the promoter gives the claimant the run-around.

The A-G, despite being evidently perturbed about UK costs generally, saw the point.

The European Commission criticised the UK for requiring a reciprocal cap. The A-G agreed. It was no good capping liabilities if this would destroy the economic basis on which lawyers can develop the necessary specialisation in these areas. This was said in response to the rather unattractive argument of both UK and Ireland that claimants’ lawyers could do this work for free – remember that the government lawyers who advanced this point (let alone those acting for developers) would get paid regardless.

Enter conditional fees – no win, no fee, typically when the client had no money to spend on the litigation. At the time of this case, the English rules allowed claimants to recover an uplift or success fee – to compensate the lawyer for the fact that the case might be lost and the lawyer might get nothing.

The reciprocal cap meant that any uplift came out of the capped sum. The A-G thought that this was dissuasive, certainly in the case of public body opponents. As she saw it, a one-way PCO was simply an initial step towards establishing equallty of arms.

The A-G also expressed a view about the importance of the rule of law, which sadly does not find favour with those in government behind the consultation paper about judicial review:

Furthermore, actions of that kind ultimately involve an interest common to both parties, namely, ensuring that the law is upheld. A public body which is unsuccessful in proceedings before a court because its decision under challenge proves to be unlawful does not deserve protection in relation to litigation costs comparable to that afforded to an applicant. It was, of course, the public body’s own unlawful act that prompted the action to be brought.

Upholding the law does not seem to have quite the same priority with the powers-that-be as facilitating infrastructure projects. Both are important, but both can be achieved if people reach decisions properly and lawfully.

Leaving that point aside, the A-G went on to make the point that public bodies should have the benefit of some costs protection.

There is no reason to impose an obligation on those bodies to pay success-related fees of the opposing party’s lawyers that considerably exceed the standard fees payable where no conditional fee agreement applies. Thus, in the name of procedural equality of arms, in actions against public bodies too the possibility of making an ‘asymmetrical’ reciprocal protective costs order that caps the risk in terms of costs for both parties but allows all the same for a reasonable success fee cannot be entirely rejected.

But in deciding that the UK had failed to fulfil its obligations under the relevant Directives, she expressed herself more firmly, and in a way which may make those responsible for the current rules prohibiting the recovery of success fees (e.g. Jackson LJ and the Rules Committee) pause for thought; UK’s failure was

by reason of the fact that in proceedings covered by those provisions the courts may order reciprocal costs protection which prevents the costs of a reasonable success fee for the representation of the persons and associations covered by those provisions from being imposed upon the opposing party if the action is successful.

Aarhus of course only applies to environmental claims, but the thrust is to ensure that those acting for the claimants are properly paid in those cases. Cue a different EU-driven world in which success fees are again recoverable in environmental cases, despite what the post-Jackson rules say?

We shall have to wait see what the CJEU says.

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Disclaimer: This blog is maintained for information purposes only. It is not intended to be a source of legal advice and must not be relied upon as such. Blog posts reflect the views and opinions of their individual authors, not of chambers as a whole.